Direct Investments: Cash And Fixed Interest Securities Flashcards
A bank deposit account (instant access savings) is a good place to hold a rainy day fund. True or false?
True
They allow instant access and are protected up to £85,000.
What, if any, is the minimum age at which a person can take out an NS&I Direct saver?
A) there is no minimum age.
B) 16.
C) 18.
B) 16
Interest on NS&I income bonds is tax free. True or false?
False.
Interest is paid gross but taxable.
State two reasons why offshore bank accounts might be more risky than similar UK deposit accounts?
If held in currency other than sterling the exchange rates may affect the investment.
The investment may not be protected by an investor protection scheme like in the UK.
In relation to gilts, what is the coupon?
The coupon is the interest rate payable on the par value of the gilt.
Jane has invested in short-dated gilts. According to the UK Debt Management Office (DMO) definition, this means that:
A) the gilts will have a redemption date within the next seven years.
B) interest on the gilts will not be paid to her until the end of the term.
C) the gilts will have a redemption date within the next ten years.
D) she will be unable to access her capital until the end of the term.
A) the gilts will have a redemption date within the next seven years.
Rubina is considering buying a gilt, 3% Treaury 2025. The gilt is currently trading at a price of £107. What is the running yield?
The running yield is £3 ➗ £107 = 2.8%
The main difference between corporate bonds and gilts is that corporate bonds:
A) usually pay a variable rate of interest.
B) are usually for larger amounts of money.
C) normally have no specified redemption date.
D) are considered to be a higher risk investment.
D) are considered to be a higher risk investment.
The main difference between a debenture and other types of corporate bond is that a debenture:
A) carries the right to vote at the companys annual general meeting.
B) is usually secured on the assets of the company.
C) can be converted to ordinary shares of the company.
D) pays a fixed rate of interest.
B) is usually secured on the assets of the company.
A eurobond is the equivalent of a gilt but issued by a government within the eurozone. True or false?
False.
A eurobond is a bond issued or traded in a country that uses a currency other than the one in which the bond is denominated. Can be issued by large companies not just governments.
Jack opens up an account so his wages can be paid into it. He can use his account to pay bills such as utilities and rent via direct debit. And he can use a debit card to make purchases online and in shops. But he can not have an overdraft. What kind of account does Jack have?
A) packaged account.
B) an interbank account.
C) a basic bank account.
D) a debit account.
C) a basic bank account.
